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Peer to Peer - experiences and risk?

Any other investment discussions eg. peer to peer lending
Gan020
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Re: Peer to Peer - experiences and risk?

#255385

Postby Gan020 » October 2nd, 2019, 1:08 pm

Berwicklaw wrote:Funding circle. Had c £50000 invested . Very well spread and the vast majority in A graded loans. Suffered c 4-5 % of bad debts or poorly recoverable loans. I expect to probably claw back c 1% in recoveries leaving 3 % as bad debt level (And that's devan le deluge to come after Brexit) Net return after tax zero. Company has poor risk assessment. I don't recommend.


Sorry to hear. I fear the situation is the same for many investors yet we do not hear about it as investors don't tend to post when things aren't going great.

I'm interested in what happens from here. I assume Berwicklaw that altough you can sell the loans on to another customer it is more likely you will run them to completion as demand from other customers I understand to be low. I'm wondering two things.
1. Where the investors money will flow to as their capital gets paid back? Traditional building socities? equities? 3-5 year fixed rate building society bonds?
2. Many of the companies who have borrowed from funding circle will want to roll the borrrowing at the end of the expiry period but with some investors withdrawing capital are there enough new ones to provide new finance and at what rates? So, will the borrowers have to borrow from more traditional routes which are not P2P at higher rates having an impact on the economy overall?

Berwicklaw
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Re: Peer to Peer - experiences and risk?

#256699

Postby Berwicklaw » October 9th, 2019, 12:16 am

I might have made a slight exaggeration there . I might have made in total 1 pa % after tax. I have managed to sell 95% of my holdings but it took me c. 4 months of rather anxious waiting before I got anything. The remaining 4-5% is largely bad debt ( some of it originally rated at A+ !! ) and I do not expect very much to be recovered. Not a total disaster but certainly not worth the risk. I actually feel I might have been lucky and it will get much worse with the coming disaster of Brexit and the likely effect on speculative property where most of Funding Circle money goes.
Funding Circles bad debt rate has more than doubled in the last 2 years.

jaizan
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Re: Peer to Peer - experiences and risk?

#256735

Postby jaizan » October 9th, 2019, 10:32 am

Peer to peer seems to be relatively new companies, chasing growth with inadequate regard for risk. They lend to people the banks have learnt not to lend to. For instance, Ratesetter lending to overseas students, who, surprise surprise, mostly leave the UK once studies are complete.

The management will get well paid whilst the growth lasts, then leave when the defaults occur and the lenders depart. I wouldn't touch this with a bargepole until the business model has been proven for at least 15 years.

No matter how good the headline rate, if it is all swallowed up by defaults, it's a bad and risky investment. I guess the default rate would go up when the economy slows down too.

If there was a P2P company doing SECURED loans AND they had a track record of recovering the debts AND the CEO was incentivised based on interest rate offered net after defaults, it might just be interesting.

toofast2live
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Re: Peer to Peer - experiences and risk?

#256980

Postby toofast2live » October 10th, 2019, 5:07 pm

I joined Zopa in 2005. So they have been going for nearly 15 years - and by and large have delivered for their lenders. When my equity portfolio declined 35% in 2008 my Zopa investments returned about 6%. So p2p is worth considering but spread your investment and don’t fall for those silly billies offering 12%+ - you know it won’t happen. Expect to earn 4% - 6% these days.

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Re: Peer to Peer - experiences and risk?

#257012

Postby BrummieDave » October 10th, 2019, 8:04 pm

toofast2live wrote:I joined Zopa in 2005. So they have been going for nearly 15 years - and by and large have delivered for their lenders. When my equity portfolio declined 35% in 2008 my Zopa investments returned about 6%. So p2p is worth considering but spread your investment and don’t fall for those silly billies offering 12%+ - you know it won’t happen. Expect to earn 4% - 6% these days.


That's been my experience too. Be sensible, and you get the returns you may expect.

I've had money deposited with Wellesley, RateSetter, Funding Circle and Zopa, and all have given me more than any bank offers, and has helped diversify my income requirements away from equities.

I'm now out of the first two completely, and am no longer reinvesting any funds in Funding Circle and Zopa. No regrets so far.

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Re: Peer to Peer - experiences and risk?

#259610

Postby Fluke » October 23rd, 2019, 10:23 am

I invested in FC in 2012 and have just today taken the final withdrawal, all remaining loans are bad debt. The summary page tells me my annualised return over this period is 5.6% but when I put the figures into an online annualised growth calculator it comes out at 2.18%. I just plugged in the amount that I invested in the first box and the total amount that I have withdrawn in the second box and given the number of 'periods' as 8 and that is the figure I get. Bit crude maybe but they can't both be right, has anyone else tried this?

Anyway, I'm glad I'm finally out of it, I joined before they went over to the fixed rate model and opted to stay with the auction model, not to reinvest but to run down the loans that I was unable to sell. It took much longer than I had envisaged when I opened the account, and I didn't like that feeling of not being able to get out of it if I wanted to. I know things have evolved since then so my advice is be sure you know what your actual return is and be clear about how you can get out if you want to, or accept that you can't.

gryffron
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Re: Peer to Peer - experiences and risk?

#259628

Postby gryffron » October 23rd, 2019, 11:57 am

Fluke wrote:Bit crude maybe but they can't both be right...

If you have been running down the amount invested for a long time then you would expect the individual years' returns to be much higher than your gross return - annualised. Because you are averaging the early profits over a longer period than you should, and you had much less invested over the later years.

So they could both be right. Not saying they are. But they could be.

Gryff

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Re: Peer to Peer - experiences and risk?

#259781

Postby Fluke » October 24th, 2019, 8:00 am

gryffron wrote:So they could both be right. Not saying they are. But they could be.

Gryff


Quite possibly Gryff but if there are 2 ways of calculating the same thing wouldn't you use the one that gives the higher number if you're trying to keep existing investors and attract new ones?

In fairness to FC they do provide details of the algorithm they use to calculate the annual return figure and for all I know that is the industry standard, and yes the online calculator wouldn't have had the details of the day to day inward and outward flows over the period. But still, many on this thread have reported returns of 7+%, really? After bad debt and fees? I'm not sure.

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Re: Peer to Peer - experiences and risk?

#259843

Postby JohnB » October 24th, 2019, 11:54 am

Funding Secure have entered Administration yesterday. p2p was by far the worst investment decision in my life, and even after I decided to sell it all 12 months ago, I only got half my money out. I have to console myself its now only 3% of my net worth, but still kicking myself.

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Re: Peer to Peer - experiences and risk?

#259858

Postby toofast2live » October 24th, 2019, 12:52 pm

toofast2live wrote:I joined Zopa in 2005. So they have been going for nearly 15 years - and by and large have delivered for their lenders. When my equity portfolio declined 35% in 2008 my Zopa investments returned about 6%. So p2p is worth considering but spread your investment and don’t fall for those silly billies offering 12%+ - you know it won’t happen. Expect to earn 4% - 6% these days.


Warned you not to go for the 12%+ers. The failure of FS proves the point.

Over a five year cycle (and NOTHING LESS) reinvesting repayments expect 4% - 6%. If you invest for fewer years or start selling or withdrawing expect MUCH LOWER rates.

Most of these p2p investments are 5 years. Invest for 1, 2, 3 or 4years and you are exposing yourself to high risk of failure. I am obviously excluding those platforms which offer “instant” access or 1 year accounts.

Most underperformers have not invested and reinvested across the five year cycle.

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Re: Peer to Peer - experiences and risk?

#259859

Postby AleisterCrowley » October 24th, 2019, 12:55 pm

I've got a moderate amount in RateSetter - should I be worried ? (I get about 5% on a 'ladder' of 1-year loans)
They have been fine so far (but Carillion were fine, until they weren't)

A specific question - is money in RateSetter's holding account protected, or would it be vulnerable in the case of a sudden increase in bad loans ?

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Re: Peer to Peer - experiences and risk?

#259940

Postby toofast2live » October 24th, 2019, 6:33 pm

Nothing is “safe”. The best bets are the big boys Ratesetter, FC (despite their cr@p underwriting 2016-2018 due to IPO fever) and ZOPA, and possibly Assetzcapital. There are 61 other p2p sites at present. I think 50% to 70% will fail to secure a future. You only have to look at the big boys, where growth has stalled to 10% to 20% growth pa. P2p is saturated.

And all because the govt and BOE is sacrificing savers and raping the finances of pensioners so snowflakes can buy houses and conventional deposit accounts pay 2% tops.

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Re: Peer to Peer - experiences and risk?

#259951

Postby PinkDalek » October 24th, 2019, 6:55 pm

AleisterCrowley wrote:A specific question - is money in RateSetter's holding account protected ...


If you mean protected under the Financial Services Compensation Scheme, this is what the FCA says for Retail Money Market Ltd (trading as RateSetter):

https://register.fca.org.uk/ShPo_FirmDe ... 01m1OXfAAM

Extract only It cannot be determined if FSCS cover would apply to this firm. Please contact the firm directly to understand whether their products/services would be covered by FSCS..

I haven't read this entire thread again to see if that area has been discussed previously.

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Re: Peer to Peer - experiences and risk?

#259978

Postby AleisterCrowley » October 24th, 2019, 8:53 pm

I may well give their T&Cs a thorough going over, whilst I'm supposed to be 'working' tomorrow. Not wasting my own time on stuff like that.. :D

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Re: Peer to Peer - experiences and risk?

#259998

Postby chas49 » October 24th, 2019, 10:09 pm

AleisterCrowley wrote:I've got a moderate amount in RateSetter - should I be worried ? (I get about 5% on a 'ladder' of 1-year loans)
They have been fine so far (but Carillion were fine, until they weren't)

A specific question - is money in RateSetter's holding account protected, or would it be vulnerable in the case of a sudden increase in bad loans ?


At the bottom of the "About us" page (https://www.ratesetter.com/about-us), it says:

Capital at risk. No FSCS protection.


Elsewhere there's lot of stuff about the Provision Fund.

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Re: Peer to Peer - experiences and risk?

#260004

Postby AleisterCrowley » October 24th, 2019, 10:26 pm

I haven't read it-yet-but "Capital At Risk" ... when part of a loan only, or can they get their grubby hands on the holding account cash ?

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Re: Peer to Peer - experiences and risk?

#260049

Postby toofast2live » October 25th, 2019, 8:21 am

FS has just collapsed and you can’t get your hands on the spare cash. Logging in just gets you to the administration notice.

SmartMoney
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Re: Peer to Peer - experiences and risk?

#267597

Postby SmartMoney » November 27th, 2019, 10:38 am

Hello everyone - I am looking to invest a decent wad in a few P2P platforms. Ideally 3 or 4 platforms - I am interested in working out which platforms are the safest. I accept that this would mean lower rates. I have 5 platforms on my radar at present but am struggling to work out which to use as they all seem to be pretty good in terms of rates/risk management. Is there such a list anywhere here or could anyone offer any suggestions as to which ones are the safer platforms.

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Re: Peer to Peer - experiences and risk?

#267804

Postby formoverfunction » November 27th, 2019, 8:54 pm

SmartMoney wrote:Hello everyone - I am looking to invest a decent wad in a few P2P platforms. Ideally 3 or 4 platforms - I am interested in working out which platforms are the safest. I accept that this would mean lower rates. I have 5 platforms on my radar at present but am struggling to work out which to use as they all seem to be pretty good in terms of rates/risk management. Is there such a list anywhere here or could anyone offer any suggestions as to which ones are the safer platforms.


Zopa, RateSetter and Funding Circle are the obvious big players.

I use them, as well as LendInvest, Assetz Capital, Octopus Choice, Downing Crowd and WiseAlpha.

You could explore the http://p2pindependentforum.com/ for further views.

I get the distinct impression most of the people using the site have a portfolio of platforms.

You might recognise Octopus and Downing from their parents activity in VCT's and listed funds.

LendInvest has a retail bond listed on the London Stock Exchange.

Assetz Capital and WiseAlpha have both raised capital on Seedrs & Crowcube, so it should be possible to find lots of information on then.

If it's a big "wad" then you could look into invoice factoring, but that will require £50,000 deposit per platform.

If you've got that kind of cash, I'd consider corporate debt as an alternative to P2P. If you are already mortage free, pension paid up and have something growth focused and a cash buffer.

Hope that helps.

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Re: Peer to Peer - experiences and risk?

#267809

Postby farwide » November 27th, 2019, 9:12 pm

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